The court has held that a surveyor does owe a buy-to-let purchaser a duty of care to get the rental valuation correct.
In Scullion v Bank of Scotland (t/a Colleys), the claimant (a self-employed builder) bought a buy-to-let property which was valued by the defendant. The claimant intended to use the rental income to pay the mortgage and outgoings on the property, to provide extra income and hoped he would make a capital return on the property. The rental income turned out to be much less than expected and the property was subsequently sold at a loss. The defendant was found to have negligently over-stated both the capital value of the property and the expected rental income.
The claimant sought damages for the inaccurate capital valuation, and inaccurate rental valuation. He also sought damages to reflect the fall in the value of the property between the date he purchased it and subsequently sold it. This was on the grounds he had only bought it on the basis of the negligent valuation and that it was foreseeable that if the valuation was inaccurate, he would be forced to sell and would suffer a loss if the market fell.
The court held, applying established authority, that the claimant was only entitled to the difference between the price paid for the property and its true value at that time. He could not recover for a fall in the property market generally. The purchase price and the true value were almost identical and the claimant was held to have suffered no loss under this head of claim.
The defendant would, however, have been well aware of the importance of the rental value both to the claimant and to the lender to ensure that the transaction was self financing and that the loan was serviced. The court did not consider it correct to characterise the claimant as a commercial purchaser on the facts. The claimant was entitled to recover the cost of meeting the normal outgoings (mortgage repayments, ground rent, service charges) of a landlord of a flat that were not covered by the rental income.
Things to consider
The defendant has obtained leave to appeal the decision on two grounds: whether the defendant owed any duty of care in tort to the claimant whom it considered a commercial buy-to-let purchaser; and if so, whether the scope of that duty extended to the losses in respect of the defective rental valuation. In giving permission to appeal, the court accepted that these were issues of wider importance to the property market generally.